AT&T Mobility President and CEO Ralph de la Vega inadvertently created a firestorm last week during a UBS financial conference in New York when he mentioned that AT&T was studying consumer mobile data usage patterns and trying to come up with ways to encourage high-bandwidth users to modify their usage. Although he stopped short of saying that the company would implement usage-based pricing, he hinted that this model is likely in the future unless the industry can comes up with a way to stretch capacity and maximize the available wireless spectrum for these services.
I guess it isn't surprising that de la Vega's comments caused an uproar among consumers--many of whom have grown accustomed to consuming lots of mobile data--and now see any type of limit on their usage as an invasion of their rights. In fact, some users are so fired up they are plotting to protest AT&T by consuming too much data and slowing down the network. Called "Operation Chokehold," the plan is for iPhone users to use bandwidth-heavy apps for an hour today and slow AT&T's network to a crawl. It's not clear to me what the point of this exercise is. In my opinion, it just proves what AT&T has been saying all along--it needs it's high-bandwidth customers to better manage their consumption or the entire network will be impacted.
What consumers don't seem to understand is that these capacity issues aren't a result of AT&T's neglect of its network. Sure, the company needed to upgrade backhaul in some markets (as it did recently in New York City) and it also needed to install more picocells in San Francisco. But this capacity problem will continue as more consumers upgrade to smartphones and start using the mobile network for bandwidth-intensive applications. This problem isn't network neglect, it's technology limitations. There's a finite amount of spectrum and all wireless carriers are going to face capacity constraints at some point unless someone comes up with a creative way to help carriers unclog the pipes.
Sure, carriers could better manage their network by upgrading their backhaul and off-loading traffic to WiFi and femtocells, but experts believe it's going to take more than those techniques to solve the impending capacity crunch. Already there are a few promising technologies on the horizon that could be a winner for wireless carriers. During a FierceWireless webinar yesterday, "10 for 2010: Disruptive Technologies that Will Rock the Wireless World," produced by Mobile Ecosystem founder Mark Lowenstein, speaker Henry Tirri, senior vice president and head of research at Nokia Research Center, discussed the potential of cognitive radio, which he says will allow wireless devices to seamlessly switch between WiFi and wide-area networks, enabling carriers to better manage network capacity and maximize their spectrum holdings.
And there are many startups trying to solve this dilemma, too. Jon Auerbach, a general partner with Charles River Investments (another speaker on yesterday's Webinar), said that since September his firm has seen business plans from nearly 30 companies which have solutions to help carriers better manage capacity. "We expect the incumbents to start spending on this area because they realize how bad the situation is," Auerbach said.
AT&T clearly has been the first to feel the pain of capacity issues, but I think other operators will soon follow. In 2010, the industry needs to make solving the capacity crunch a big priority. Otherwise, it's going to have to huge perception battle to overcome with the consumer. --Sue